Experiments in Technical Analysis

[rajesh.sadhanala]

Raj

Thanks for pointing this out. It will be very nice if you can post the revised afl file so that non techies also can use it .

Thanks

reagrds

Karthik

Yes Karthik, I m upload the file in txt extension. Pls change it to afl.

Regards

 

[karthikmarar]

Re: Experiments in Technical Analysis- WHIPSAWS.

Frm: Gandhiadg:

To:mr.karthikmarar And Senior Memebers:

Is It Possible To Minimize The Whipsaws If We Use Ma Based On The High And The Low Of The Daily Price Istead Of Close For Short As Well As Medium Term Trading.

If Someone Has Carried Out A Backtest Using Various Periods For Ma (based On Low And High) Then The Feedback Could Be Valuable.

Looking Forward For A Valuable Feedback.

Thks In Advance.

Gandhiadg

Dear Gandhi

Yes this will definitely reduce whipsaws. Just reproducing one of my earlier post (during my early days in the forum ) in the moving average trading thread. Unfortunately I dont have the back test data. Nowadays I don't do any Back test. Normally my experts themselves show the clear picture on the charts.

Hi

I would like to share my observations on the MA trading system. I found that the following little changes reduced whipsaws to a good extent.

When the 39 MA(close) is moving up buy when the 3 MA(close) crosses up over the 13 MA(high) and/or when the 3 MA(close) crosses above the 39 MA(close). When the 13 MA(high) crosses above the 39 MA(close) consider adding to your long position. Exit and stand aside when the 3 MA(close) crosses back below the 13 MA(low).

The entry point is more delayed. But maybe it is better than being whipsawed often.

A more safer entry (of course less profitable ) will be as follows

regards

karthik

Karthik

 

[bjj9126]

I have found a good CCI(14) pattern for short term Sell,
Please see the attachment &
Seniors are requested to comment please,

I am working with Metastockpro9.0,

I am tired to find this pattern bcoz I dont know Meta Language,

Can anyone make the explorer formula to find out this pattern ?

This will be the great help for me & also for learning Member like me !

bjj9126

 

[AJAY]

Dear bjj9126,

You may try on this formula which I made now keeping your charts'view in mind. You may keep this formula in expert also in symbol.

I didn't test it. It is just only a view of a few charts I had - after making this Expert - on looking at your post and found that the view is almost matching. You better test it before you adopt.

H>BBandTop(C,20,S,2) AND C<O AND (Cross(Mov(CCI(14),5,E),CCI(14))

And one more suggestion, though unsolilicited. Never try to catch tops and bottoms. You require a different type of skills to adopt any mechanism which catches tops and bottoms, which is practically difficult to adopt.

Thanks and Happy Technical Trading

AJAY

 

[karthikmarar]

I think it is time for us to proceed to the next trading system. I was expecting more powwows on the first trading system. Maybe it was to good for people to come up with the brickbats.

Ok, Let us move on. The next system we are going to look at is from Tushar chande. First we will look at the systems as presented by him. Later on we can look at the ways of improving it.

Tushar Chande called it the Extraordinary Opportunity. As I am averse to long names I will be calling it the EXOP system.

First draw a 50-day SMA of the close and plot a 3-percent trading band (+3% and 3%) around it. Then plot a 7-day SMA. When the 7-day SMA crosses above the upper band a Bullish opportunity is supposed to exist. When the 7-day SMA crosses below the lower band an extraordinary Bearish situation is supposed to exist.

So this extraordinary situation will be our setup. For the entry for long we will use a two week breakout.(Tushar chande suggests a 20 day breakout). The exit strategy could be simple like the 7-day SMA crossing below the lower band.

Just us go over the entry and setup for long trades.

SETUP: Crossing of the 7-day SMA above a 3% band of the 50-day SMA of the close.
ENTRY: A 10-day breakout (in order not miss any opportunity we will allow 20 periods for the breakout)
EXIT: Crossingof the 7-day SMA below the 3% band of the 50-day SMA of the close and a 10 day breakout on the down side. (allow at least a 5 day times for the breakout in order to avoid being thrown out early)

I am enclosing some charts. You can see that this system helps one to catch on to some major up trends and downtrends.

Some of the drawbacks it causes false moves in a sideways market. We will look at the drawback and solutions later. The metastock and Amibroker formulas will be posted soon


Best regards

Karthik

 

[chartzone]

I think it is time for us to proceed to the next trading system. I was expecting more powwows on the first trading system. Maybe it was to good for people to come up with the brickbats.

Ok, Let us move on. The next system we are going to look at is from Tushar chande. First we will look at the systems as presented by him. Later on we can look at the ways of improving it.

Tushar Chande called it the Extraordinary Opportunity. As I am averse to long names I will be calling it the EXOP system.

First draw a 50-day SMA of the close and plot a 3-percent trading band (+3% and 3%) around it. Then plot a 7-day SMA. When the 7-day SMA crosses above the upper band a Bullish opportunity is supposed to exist. When the 7-day SMA crosses below the lower band an extraordinary Bearish situation is supposed to exist.

So this extraordinary situation will be our setup. For the entry for long we will use a two week breakout.(Tushar chande suggests a 20 day breakout). The exit strategy could be simple like the 7-day SMA crossing below the lower band.

Just us go over the entry and setup for long trades.

SETUP: Crossing of the 7-day SMA above a 3% band of the 50-day SMA of the close.
ENTRY: A 10-day breakout (in order not miss any opportunity we will allow 20 periods for the breakout)
EXIT: Crossingof the 7-day SMA below the 3% band of the 50-day SMA of the close and a 10 day breakout on the down side. (allow at least a 5 day times for the breakout in order to avoid being thrown out early)

I am enclosing some charts. You can see that this system helps one to catch on to some major up trends and downtrends.

Some of the drawbacks it causes false moves in a sideways market. We will look at the drawback and solutions later. The metastock and Amibroker formulas will be posted soon


Best regards

Karthik

Here is the Formula for Metastock:-

Open indicator builder > new & past it :-

abc1:=(Mov(C,50,S))*1.03;{+3% band}
abc2:=(Mov(C,50,S))*0.97;{-3% band}
Mov(C,50,S);{50 SMA}
Mov(C,7,S);{7 SMA}
abc1;{+3% band}
abc2;{-3% band}

Chartzone

 

[karthikmarar]

Thanks Chartzone for the Metastock formula. Here is the formula for the Metastock expert for those of you who would like to experiment further.

TREND
Bullish
C>HHV(Ref(H,-1),20) OR C>Mov(C,50,S)*1.03
Bearsh
C<(Mov(C,50,S)*0.97) OR C<LLV(Ref(L,-1),10)

HIGHLIGHTS
Bullish
C>HHV(Ref(H,-1),20) OR Mov(C,7,S)>Mov(C,50,S)*1.03
Bearish
C<(Mov(C,50,S)*0.97) OR C<LLV(Ref(L,-1),10)
Neutral
C<HHV(Ref(H,-1),20) AND C<Mov(C,50,S)*1.03 AND C>(Mov(C,50,S)*0.97) AND C>LLV(Ref(L,-1),10)
Note : Enable the ribbons

SYMBOLS
Bullish condition :
BarsSince( Cross(Mov(C,7,S),Mov(C,50,S)*1.03))<20 AND Cross(C,HHV(Ref(H,-1),10))AND C>Mov(C,50,S)*1.0

Graphic Up arrow, color green,

Bearish Condition:
BarsSince(Cross((Mov(C,50,S)*0.97),C))<10 AND Cross(C,LLV(Ref(L,-1),10))

Graphic : Down Arrow, color


Also enclosed the Meastock Expert formula File.

Regards

Karthik

 

[karthikmarar]

For the Amibroker who wish to experiment with the EXOP system Here is the afl.

regards

Karthik

 

[hvram]

Hi Karthik
Can you explain what is meant by the break out ? or point me appropriately

Also can you tell me what is the difference between setup and entry ? Are both not the same as buy signals ?

Thanks a lot for the clarifications

Regards
Hari

 

[karthikmarar]

Hi Hari

Here what I meant by breakout is just the highest value or lowest value in the required period. For example If we consider a period of 20 days we enter when the close is the highest in the last 20 trading sessions. Maybe I should have used other notation in order not to confuse other terms like range breakout or volatility breakout or breakout from patterns like ascending triangles.

A setup is a set of favorable conditions that should exist before we condsider entry into a particular stock.

The Entry is where/when we will actually enter the stock.

For example one setup could be the 3ma crossing above the 5ma in the weekly chart. That would mean that the longer term is bullish. Then we can go to the daily chart and see where we can enter. The short term may not be really bullish. It may be going through a small pull back. Then we wait for the right oppurtunity to actually enter the stock. Again 3ma crossing or above 8ma and the stock not being in over bought region could be an entry point.

Hope I was clear. If still in doubt feel free to ask.

warm regards

Karthik